Andersen Singapore, Ernst & Young plan merger

Andersen Singapore, Ernst & Young plan merger

Associated Press, Singapore

Accounting firms Andersen Singapore and Ernst & Young on Wednesday said they would merge their operations in the Southeast Asian city-state - a deal that is likely to lead to similar mergers in other countries.

"My partners and I are very excited about the prospect of joining with Ernst & Young and look forward to working with them to create a new leading position in professional services providers in Singapore," said Steven Lim, managing partner of Andersen Singapore.

The merger is subject to a satisfactory review of Andersen's legal position and financial records and approval of the merger by regulatory authorities and board members from each company - expected in the coming weeks.

Both Ernst & Young managing partner Fang Ai Lian and Andersen's Lim said they were confident there would be no regulatory hurdles or dissent from board members.

Andersen affiliates around the world have been seeking mergers with other major accounting firms since Andersen's U.S. arm was indicted for alleged obstruction of justice in the collapse of U.S. energy giant Enron.

At a news conference in Singapore, Fang said the two firms had "good vibes" and "great chemistry." Executives drank champagne Wednesday after agreeing to merge.

The companies, which have 1,000 employees each, said the combined firm will take Ernst & Young's name. If successful, the Singapore merger would form the city-state's largest accounting and advisory firm.

When asked if there would be layoffs, executives from both firms said they didn't yet know.

Dozens of Andersen affiliates in Asia, Latin America and Europe look set to follow Singapore's lead and work toward a merger with Ernst & Young, Andersen's managing partner for Asia John Prasetio told The Associated Press on Tuesday.

Andersen Espana, the Spanish operation of Andersen Worldwide, said Tuesday it was set to enter a tie-up with Deloitte Touche Tohmatsu International.

Asian merger talks with Ernst & Young are a blow for another rival, KPMG International, which last month said it was negotiating a deal with 13 Asian affiliates. That deal fell through as global talks for a merger of Andersen's and KPMG's non-U.S. businesses collapsed.

Nonetheless, the Thai units of Andersen Worldwide and KPMG International said Wednesday they have reached a preliminary agreement to merge their operations in the country.

Kaisri Nithikarnphitha, country managing director of Andersen Thailand, said the agreement was reached last month and should be finalized by June, pending review of the companies legal and financial position.

If the deal goes through, the merged entity should be launched in October, Kaisri said.

However, Australian affiliates also ditched talks with KPMG, citing a potential conflict of interest. Andersen's Hong Kong and Chinese affiliates say they are planning to merge with PriceWaterhouseCoopers, while Andersen units in Russia and New Zealand said they plan to merge with Ernst & Young.

Andersen is also talking with Ernst & Young in Indonesia, Vietnam and other Asian countries, Prasetio said.

Lim, who has been with Andersen Singapore since 1974 and remembers when the firm only occupied two small rooms, said it was hard to see the Andersen name go.

"This is largely a U.S. problem," he said. "But we have to move on."